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Delta Air Could Buy Conoco's Trainer Refinery For $100M-$150 Mln .
Wall Street Journal ^ | 05 April 2012 | Isabel Ordonez, Susan Carey and Tom Fowler

Posted on 04/16/2012 8:50:39 PM PDT by Lorianne

Delta Air Lines Inc (DAL), burdened by the soaring cost of jet fuel, is seriously thinking of making some of its own by buying an idled ConocoPhillips (COP) refinery near Philadelphia, people familiar with the matter said Thursday.

Delta, the world's second-biggest airline by traffic, is in talks with Conoco to acquire its Trainer, Pa., facility at a cost of $100 million to $150 million, one person familiar with the matter said. Delta would hire an outside firm to run the refinery.

The move could help supply Delta's operations at La Guardia ...

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; US: Pennsylvania
KEYWORDS: energy; refinery
Smart move
1 posted on 04/16/2012 8:50:44 PM PDT by Lorianne
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To: Lorianne

I agree very smart move but watch Obama put a halt to it


2 posted on 04/16/2012 8:52:32 PM PDT by al baby (Hi Mom)
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To: al baby

B I N G O

The arabs spent $Hundreds of Millions on setting up Obama to destroy the US as they send $Billions to the Arab nations.

Obama will NOT let anything like this happen. It would be the roadmap to bypass the Federal Government’s destruction of the energy sector at Obama’s direction.


3 posted on 04/16/2012 8:59:30 PM PDT by politicianslie (Obama: America's first Muslim PRESIDENT, It's past time for America to take out the trash in DC.)
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To: Lorianne

Now THAT’S thinking ‘outside the box’!

I couldn’t get the whole story since I don’t subscribe to the WSJ (Investor’s Business Daily is far better), but the Delta management sounds like they’re really on top of their game.

Free enterprise is always better.


4 posted on 04/16/2012 9:02:34 PM PDT by MichaelCorleone (Stop feeding the beast; spend money only with those who support traditional American values.)
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To: Lorianne

Unlikely a good move. How can an airline make a profit from an unprofitable refinery when the oil company’s business is refining?


5 posted on 04/16/2012 9:05:59 PM PDT by VRWC For Truth (Throw the bums out who vote yes on the bailout)
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To: thackney

Ping.


6 posted on 04/16/2012 9:17:18 PM PDT by Army Air Corps (Four Fried Chickens and a Coke)
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To: VRWC For Truth

Running the supply, operations, maintenance, and distribution of a petroleum refinery in the northeast of the United States is a complex business. Especially if the refinery is 90 years old, already has environmental compliance issues, and faces the unknowable consequences of future greenhouse gas emissions limits. I suspect that ConocoPhillips knows a bit more about refining than Delta Airlines, and that’s why they put the Trainer refinery on the market.


7 posted on 04/16/2012 9:17:59 PM PDT by Skepolitic
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To: VRWC For Truth

“How can an airline make a profit from an unprofitable refinery when the oil company’s business is refining?”

By in-housing the ‘Crack-Spread’, and middleman profits.

It also takes a critical supply chain out of someone else’s hands, and puts it in yours, at what you know will be your most profitable hubs, after the slot-swaps.


8 posted on 04/16/2012 9:18:33 PM PDT by tcrlaf (Election 2012: THE RAPTURE OF THE DEMOCRATS)
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To: VRWC For Truth

Seems like a smart move to control a vital part of the supply train for your business.

However, I agree it is a bit risky.


9 posted on 04/16/2012 9:18:57 PM PDT by Lorianne (fedgov, taxporkmoney)
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To: VRWC For Truth

“How can an airline make a profit from an unprofitable refinery when the oil company’s business is refining?”

The article states Delta would retain an outside company to run the refinery, so presumably this company knows what it’s doing, and

Conoco is a huge company and there may be economies of scale reasons for abandoning that refinery, even non-oil related reasons.

I’m just guessing but my bet is Delta is well advised on this and will consider all hazards before taking the plunge.


10 posted on 04/16/2012 9:21:58 PM PDT by MichaelCorleone (Stop feeding the beast; spend money only with those who support traditional American values.)
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To: tcrlaf

It’s not a new idea. Airlines have been in the oil business before, and Delta has been all along. They owned and ran a pipeline with a subsidiary, Epsilon Trading, which is still in the av fuel business.

United has also been in the oil biz.


11 posted on 04/16/2012 9:27:36 PM PDT by ltc8k6
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To: Lorianne

I don’t think it is a smart move. ConLips closed the refinery for a reason... non-competitive to make the clean air upgrades in all probability.

On top of that, refining margins are good but not that good and Delta doesn’t know much about running a refinery.


12 posted on 04/16/2012 9:53:37 PM PDT by Sequoyah101
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To: Lorianne

There are probably 2-3 ways for this to go well, and 15-20 for it to not go well. I don’t underestimate the complexities of running a refinery; I actually find them quite interesting and wish I knew more about them.

But, I give Delta credit for the concept; the depreciation applied against their costs could make this a wise move, and they are probably buying the refinery at a low point. In some ways, it is deserved, because as another poster said, this is an older refinery. Geez, remember circa 2005-2007 when refining was the cat’s meow? Valero stock was a market darling, they bought up large numbers of smaller refinieries...now VLO is trading at about 1/3rd its stock price then. Guess the world decided refining was a crappy business. (It is)


13 posted on 04/16/2012 10:02:27 PM PDT by Attention Surplus Disorder (A conservative, a liberal and a moderate walk into a bar. Bartender says "what'll it be, Mitt?")
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To: All
Some analysis:

Delta Air Lines considers buying a refinery to cut fuel costs

Delta Air mulls bold bid for Penn. oil refinery

14 posted on 04/16/2012 10:07:01 PM PDT by VRWC For Truth (Throw the bums out who vote yes on the bailout)
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To: VRWC For Truth
Corrected first link:

Delta Air Lines considers buying a refinery to cut fuel costs

15 posted on 04/16/2012 10:11:18 PM PDT by VRWC For Truth (Throw the bums out who vote yes on the bailout)
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To: Lorianne; Tribune7; Kid Shelleen

Interesting PING.

Plus added links at #14/15.


16 posted on 04/16/2012 10:18:30 PM PDT by brityank (The more I learn about the Constitution, the more I realise this Government is UNconstitutional !!)
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To: Lorianne

Delta’s management cant run an airline so its good to try other things...


17 posted on 04/16/2012 11:41:58 PM PDT by montanajoe
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To: VRWC For Truth

I’m with you. Upstream vertical integration into the fuel business? That’s just nuts. How far from your core competency can you possibly get?

Remember when Ford ran its own ore docks, steel furnaces, coke ovens, rolling mills, glass furnaces and plate-glass rollers? They also had a tire-making plant, stamping plant, engine casting plant, frame and assembly plant, transmission plant, radiator plant, tool and die plant, and, at one time, even a paper mill. A massive power plant produced enough electricity to light a city the size of nearby Detroit, and a soybean conversion plant turned soybeans into plastic auto parts.

There’s a reason Ford doesn’t do that any more.


18 posted on 04/17/2012 1:08:59 AM PDT by ProtectOurFreedom
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To: VRWC For Truth

They’re not closing the refinery because it was making too much money. They’re closing it because there’s no money in operating refineries.
The East Coast is having a major problem getting crude in to refine. All their crude comes from the middle east and Africa and the price is much higher than WTI.


19 posted on 04/17/2012 3:22:14 AM PDT by Recon Dad (Gas & Petroleum Junkie)
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To: ProtectOurFreedom

There’s no money in refineries especially on the east coast. The source of crude is from the Middle East and Africa. Maybe Delta plans on flying crude in from ND or the gulf coast. (the last was meant to be a joke)


20 posted on 04/17/2012 3:45:49 AM PDT by Recon Dad (Gas & Petroleum Junkie)
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To: ProtectOurFreedom

“Remember when Ford ran its own.... “
Yup, I’m driving one of the cars produced by that giant, a 1931 Model A Deluxe Coupe. Ford logo stamped on almost every part!


21 posted on 04/17/2012 3:59:51 AM PDT by Fireone (The time for Newt/Palin is NOW! (did I mention FUBO?))
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To: MichaelCorleone; Lorianne

http://fuelfix.com/blog/2012/04/12/delta-said-to-seek-fuel-savings-with-conocophillips-refinery/

Article for reading without subscription


22 posted on 04/17/2012 5:09:13 AM PDT by thackney (life is fragile, handle with prayer)
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To: VRWC For Truth
How can an airline make a profit from an unprofitable refinery when the oil company’s business is refining?

Operating as a break-even without profit may be more economical than letting refinery close and have even higher fuel charges from Jet Fuel barged in while local demand exceeds capacity.

It may not be economical from a refinery operations point of view, but it may be a cost savings to the alternative for fuel purchases.

23 posted on 04/17/2012 5:11:33 AM PDT by thackney (life is fragile, handle with prayer)
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To: VRWC For Truth

Delta Said to Seek 10% Fuel Savings With ConocoPhillips Refinery
http://www.businessweek.com/news/2012-04-11/delta-said-to-seek-10-percent-fuel-savings-with-conocophillips-refinery


24 posted on 04/17/2012 5:14:52 AM PDT by thackney (life is fragile, handle with prayer)
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To: Fireone

LOL...you found the Easter Egg! I wondered if anybody would get it.


25 posted on 04/17/2012 6:16:34 AM PDT by ProtectOurFreedom
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To: South Hawthorne; brityank; Physicist; WhyisaTexasgirlinPA; GOPJ; abner; baseballmom; Mo1; Ciexyz; ..

ping


26 posted on 04/17/2012 6:59:15 AM PDT by Tribune7 (GAS WAS $1.85 per gallon on the day Obama was Inaugurated! - - freeper Gaffer)
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