Delta interested in buying an oil refinery?

[outerlimits]

I always wondered what John Ross Ewing (JR Ewing's son) did after he grew up at South Fork, and it now appears he might be flying Orange and Blue 737-300s over Western Texas.


Godspeed!


The OYSter

I hate to Be the one that tells you this, but that was not real,it was just a TV show.

Monday I have more news to tell you about the Easter bunny,but I will be kind and wait.

 

[knowlimits]

I hate to Be the one that tells you this, but that was not real,it was just a TV show.

Monday I have more news to tell you about the Easter bunny,but I will be kind and wait.

Even though outerlimits is an illiterate tool that was funny.

 

[redflyer65]

Yes. Well played sir.

 

[johnsonrod]

Delta hates Obama's energy policy - bidding on refinery...

Hey Naysayers,

Looks like OYS was correct - there is an article mentioning Delta's interest in potentially acquiring the refinery. The number one expense at airlines is now fuel expense - right? At least Delta is starting to think outside the box regarding how to manage the most expensive cost item (beyond management bonuses)...

Read below:



http://mobile.philly.com/business/?wss=/philly/business&id=145858465&viewAll=y#more

By Linda Loyd

INQUIRER STAFF WRITER

Sunoco Inc.'s oil refinery in Philadelphia has at least four potential buyers, and ConocoPhillips has one, and possibly two, offers for its idled Trainer refinery, an oil analyst with an independent trade publication said Monday.
"The entire dynamic of the U.S. East Coast markets may be about to change," said Tom Kloza, chief oil analyst with the Oil Price Information Service in a note to subscribers. Kloza said bids for the Sunoco plant were due Monday and "multiple sources" in refinery mergers and acquisitions have told him there were "at least four tenders" for Sunoco.

One of them is Radnor-based Preferred Energy L.L.C., which has put in a "substantial bid," and would continue to operate the 335,000 barrel-a-day complex as a refinery, said Preferred president and CEO Michael O'Neill.
"All the principals are from Philadelphia. We would love to see the place stay open. We have put together a great team of refinery operators, energy traders, logistics and oil industry and financial partners," O'Neill said.
Other possible bidders include United Refining Co., owned by John Catsimatidis, who put in an "initial bid although some sources believe that this company would only operate the refinery if they receive quite a few government and union concessions," Kloza said.

Also bidding was PBF Energy, which operates the former Valero refineries in Delaware City and Paulsboro, and the Wall Street private equity-based Apollo Global Management L.L.C., which "has been looking at U.S. and European based refineries for some time, and has looked to do deals with wraparound crude oil supply coming from investment house JP Morgan," Kloza said.

Sunoco spokesman Thomas Golembeski said, "We are still trying to sell Philadelphia refinery as an operating refinery. We are still talking to interested parties, but that's the extent of what I can say."

Separately, ConocoPhillips has one or two possible suitors. Kloza said that Delta Air Lines, or a company affiliated with Delta, may bid on the Trainer refinery "with intent to maximize jet fuel production for its operations in the Northeast United States. It is not known whether the airline has a partner to handle the extraordinary capital needs of operating a refinery, and securing crude and feedstock needs," Kloza wrote. "For an airline to buy a refinery, which is an incredibly capital-intensive business, would be unprecedented in this country."

Delta is the world's second largest airline after merging with Northwest, with a hub at New York's JFK airport and a big operation at New York LaGuardia airport.

"At least one other company, said to be a crude oil producer with access to Bakken crude is believed to have advanced interest in the Trainer refinery," Kloza said in the report. "Sources believe that any operators of Philadelphia or Trainer still have a lot of work ahead of them, including negotiations with unions as well as sweeteners from local, state, and federal groups that want to see both refineries remain part of the mix."

"I'm pretty confident that we've got some real good buying interest in Philly," he said. "I'm pretty confident that we are not going to see the Sun Philadelphia refinery close on July 1." Kloza said his information is less certain for ConocoPhillips "because I don't know what contingencies might be there for a potential operator.

"I don't hear anyone looking at the closed refinery at Marcus Hook, unfortunately," Kloza added.

Contact Linda Loyd at 215 854 2831 or [email protected].

 

[On Your Six]

I hate to Be the one that tells you this, but that was not real,it was just a TV show.

Monday I have more news to tell you about the Easter bunny,but I will be kind and wait.

No, it's real, in Redflyer's World. His family is in the oil business, and he KNOWS oil, and what airlines should do. It's connecting the dots. Hopefully he has GK's ear, and is telling him exactly what to do.


Godspeed!


The OYSter

 

[redflyer65]

OYS,

I talked to some insiders at Delta and they leaked the info and it's brillant!

Appearantly they have clauses in the Airline Services Agreements with their small jet operators forcing them to buy Jet A from Delta if they own a refinery. It seems like they found another way to extract more money out of those contracts. I say Bravo! There are so many Delta Connection planes flying around that it will be a complete windfall. Oh, and the refinery workers will all be outsourced as well, just as they done with other 'Delta' jobs.

I wish Delta all the best with their new operation. Next, you guys will be operating oil tankers to feed the refinery because you already have the jackets for it.

Full Steam Ahead OYS!

 

[On Your Six]

OYS,

I talked to some insiders at Delta and they leaked the info and it's brillant!

Appearantly they have clauses in the Airline Services Agreements with their small jet operators forcing them to buy Jet A from Delta if they own a refinery. It seems like they found another way to extract more money out of those contracts. I say Bravo! There are so many Delta Connection planes flying around that it will be a complete windfall. Oh, and the refinery workers will all be outsourced as well, just as they done with other 'Delta' jobs.

I wish Delta all the best with their new operation. Next, you guys will be operating oil tankers to feed the refinery because you already have the jackets for it.

Full Steam Ahead OYS!

Why then is the airline dumping regional feed? Wouldnt they keep more around if they planned to make more money off of them in the near future? That doesn't seem to be the case.


Will you guys be driving the 18 wheelers that deliver the fuel since you have the uniforms already for that? Honk that big semi trunk horn for us! Say hi to Billie Jo at the truckstop in Ft. Stockton.


Godspeed!


The OYSter

 

[Griswold]

OYS,

I talked to some insiders at Delta and they leaked the info and it's brillant!

Appearantly they have clauses in the Airline Services Agreements with their small jet operators forcing them to buy Jet A from Delta if they own a refinery. It seems like they found another way to extract more money out of those contracts. I say Bravo! There are so many Delta Connection planes flying around that it will be a complete windfall. Oh, and the refinery workers will all be outsourced as well, just as they done with other 'Delta' jobs.

I wish Delta all the best with their new operation. Next, you guys will be operating oil tankers to feed the refinery because you already have the jackets for it.

Full Steam Ahead OYS!

Yea we are going to start asking pilots to fly for 6 months then drive a fuel truck for six months.
What is all this ******************** against Delta from the SWA guys on this forum. If you take a step back and look at all the crap here and half the threads you sound like kids talking about how good your flag football team is. Get ready guys for the tackle league. International to Mexico with no first class and no fuel hedge anymore. Good airline, but look at a little history to see how it all plays out. Say you are 40 and have 25 years left. 10 years can change your outcome in retirement, pay and QOL. I don't wish any bad ******************** with ya'll but be on your toes as things could change. Advise is to step off your high horse and get your picture without the roses and mint julep in hand.

 

[outerlimits]

Yea we are going to start asking pilots to fly for 6 months then drive a fuel truck for six months.
What is all this ******************** against Delta from the SWA guys on this forum. If you take a step back and look at all the crap here and half the threads you sound like kids talking about how good your flag football team is. Get ready guys for the tackle league. International to Mexico with no first class and no fuel hedge anymore. Good airline, but look at a little history to see how it all plays out. Say you are 40 and have 25 years left. 10 years can change your outcome in retirement, pay and QOL. I don't wish any bad ******************** with ya'll but be on your toes as things could change. Advise is to step off your high horse and get your picture without the roses and mint julep in hand.

Funny, as an outsider looking in I was going to say I see it the other way around.

Then I read the second part of your post, and see that it is not just as I see it but it is fact.

 

[DieselDragRacer]

In my experience you can run Jet A in a diesel engine however expect problems with seals if running a traditional type injection pump. Not sure how a common rail system will deal with it but I will guess better than the old style pumps. Jet A has a less oil in it and is a key lubricant in the pumps. I have seen it done but the smart folks added Murphy's mystery oil to the jet A to give some lubrication properties for the seals and o rings. As for diesel in a jet engine it does not run well, but will run. Higher EGT's and smutted up compressor section. When I was in the Army saw it happen on a AH-1 which was mis fueled at the POL site. We had to change the engine and flush all fuel lines. I am sure if it was truly interchangeable it would be common practice.

Correct. Jet-A and kerosene don't have the lubricity that diesel has (causes injector/fuel pump issues) nor does it have the BTUs of diesel meaning ~20% less HP.

In order to safely run Kero/Jet-A long term in the <2008 non-EPA diesel motors, what we would do is add a quart of 2 stroke oil or Stanadyne to a ~30 gal tank.

I'm not sure how Kero/Jet-A would work in the 2008-current EPA motors considering all the sensors, DEF injection, exhaust regeneration etc.

 

[HalinTexas]

Little difference between Kerosene, #1 diesel and Jet A from a refining standpoint, although they are not necessarily interchangeable.

DAL maybe looking for some control over the retail (refined) price of Jet A, not so much as an investment opportunity. If they are the largest customer for Jet A, they can get it for cost, effectively and without getting into detail, and sell the rest. If they can get cheaper (or less volatile) price on Jet A and their refinery doesn't lose money, they win. Hopefully, this isn't a boon-doggle.

 

[JimNtexas]

Most MBA's would say that an airline has no business buying an oil refinery, since that's out of their 'core competence'. Conventional wisdom is to just have marketing and finance in the US, outsource software and customer contact to India, hardware to China. Hire on 1099s. Take no risks.

But then I look at SpaceX, who outsources almost nothing and is able to make rocket ships at a cost substantially less than even China can match.

It may be that Delta is right to bring more of its costs under its own roof after all.

And I don't buy the 'it's impossible because nobody has done it' argument.

 

[redflyer65]

And I don't buy the 'it's impossible because nobody has done it' argument.

I completely agree. I say..


Full Steam Ahead.

 

[Andy]

Little difference between Kerosene, #1 diesel and Jet A from a refining standpoint, although they are not necessarily interchangeable.

Thank you! I was tempted to post that in response to JimNTexas' original question. The biggest difference from a refinining standpoint is that Jet A has a slightly shorter carbon chain than diesel.
I don't know all of the additives that are put in each after refining but diesel isn't going to need the same amount of FSII as Jet A. And from reading others' posts, it appears that Jet A doesn't have as many lubricant additives as diesel. This article confirms additional lubricant additives in diesel fuel: http://www.ehow.com/facts_5808896_difference-jet-fuel-diesel-fuel_.html

Both Jet A and diesel can be refined from heavy or light crude.

The problem with heavy crude is that it has a longer carbon chain than light crude so that it requires more refining than light crude.

As to the wisdom of an airline acquiring a refinery, I'll defer to those in the oil industry. http://www.foxbusiness.com/industries/2012/04/06/is-refinery-ownership-key-to-airline-fuel-woes/

 

[redflyer65]

Excellent article Andy. I find it really interesting that people who actually run and operate refineries like these are losing money....and have been doing it for years, on these very sites.

Part two of the story...no other operators want them either. I would say that makes it a questionable venture at best..

Theoritically speaking, if Delta did buy the refinery how would they change of equation of it still being a money loser? These refineries require light sweet crude. There is none in the area. Maybe they have a different plan, could be interesting to watch if they pull the trigger.

 

[Dan Roman]

Funny, as an outsider looking in I was going to say I see it the other way around.

Then I read the second part of your post, and see that it is not just as I see it but it is fact.

An outsider looking in? Your whole focus on here is pro SWA and trying to make DAL RJ pilots look like inexperienced rookies trying to steal mainline flying. You are obviously a SWA pilot in the same vain as Tankerclown, that version of SWA pilot tried to make Air Force tanker pilots look like idiots while he attacked DAL.

As was said, the whole "my airline can beat up your airline" crap is juvenile and pretty much makes pilots on here appear to be over grown kids who would struggle in the real world.

 

[Dan Roman]

Nice to see all the experts on oil refining on here, you guys may have missed your calling.
I heard SWA is going to retaliate by buying a peanut factory to keep costs down?

 

[Freebrd]

What is all this ******************** against Delta from the SWA guys on this forum. hand.

Go wayyyyyy back and you'll see that weenie Jenny Leigh and the other one, OysYoYo started slamming SWA in addition to stirring it up on the regional board as well. PUTZ!

 

[redflyer65]

An outsider looking in? Your whole focus on here is pro SWA and trying to make DAL RJ pilots look like inexperienced rookies trying to steal mainline flying.QUOTE]

I'd say he's probably getting tired of being treated like a second class citizen at Mother Delta and my see a pretty big difference if hired at SW.

Oh, and he admits he didn't steal anything, he thanks you for the outsourced flying. Food on the table and all that stuff.

Full Steam Ahead Gentleman!

 

[ASADFW7]

Please debate the topic.

 

[KNOTS]

Thank you! I was tempted to post that in response to JimNTexas' original question. The biggest difference from a refinining standpoint is that Jet A has a slightly shorter carbon chain than diesel.
I don't know all of the additives that are put in each after refining but diesel isn't going to need the same amount of FSII as Jet A. And from reading others' posts, it appears that Jet A doesn't have as many lubricant additives as diesel. This article confirms additional lubricant additives in diesel fuel: http://www.ehow.com/facts_5808896_difference-jet-fuel-diesel-fuel_.html

Both Jet A and diesel can be refined from heavy or light crude.

The problem with heavy crude is that it has a longer carbon chain than light crude so that it requires more refining than light crude.

As to the wisdom of an airline acquiring a refinery, I'll defer to those in the oil industry. http://www.foxbusiness.com/industries/2012/04/06/is-refinery-ownership-key-to-airline-fuel-woes/

Jet fuel has lots of additives.. including things that are added to make it less likely to explode in a crash....http://www.youtube.com/watch?v=Y33N0raKZBo (test footage of fuel additive added)

 

[Andy]

Jet fuel has lots of additives.. including things that are added to make it less likely to explode in a crash....http://www.youtube.com/watch?v=Y33N0raKZBo (test footage of fuel additive added)

Thanks; I didn't look at all of the additives in each fuel (Jet A vs diesel) because JimNTexas' question centered on the difference in Jet A vs diesel from a refinining standpoint. The basics of refining can be found here: http://science.howstuffworks.com/environmental/energy/oil-refining.htm

 

[SWA GUY]

The problem with the Trainer Facility(former Sunoco, now Conoco-Phillips) is that its a Brent plant and not a WTI plant.

Brent is about $20/bbl higher in price than WTI. Brent crude contains loads of sulfur which makes the refining process even more expensive, and that's on top of the $20/bbl difference.

This plant can be converted at considerable cost, but whomever buys it is going to have to steal it to make it worthwhile. And its a long shot that the new owner, if there is a change in ownership, can make any money with it.

*This analysis comes from a former Fortune 100 Oil company CEO, and the current CEO/Owner of the largest privately held LPG import business in the US(I'd say he has a pretty good handle on this).

Advice to DAL: Be careful what you wish for.

 

[HalinTexas]

Just be wary if DAL buys McDonald's to refine the frier grease.

 

[Scoot 11]

As was said, the whole "my airline can beat up your airline" crap is juvenile and pretty much makes pilots on here appear to be over grown kids who would struggle in the real world.

Pretty sad and pathetic isn't it. Funny part is, that one of the mods is a SWA pilot, so he lets the DAL bashing go on, but censors the SWA bashing.
Pathetic indeed...........................

 

[outerlimits]

Deleated

 

[dicko]

I always wondered what John Ross Ewing (JR Ewing's son) did after he grew up at South Fork,
Godspeed!

The OYSter

Disregard. Somebody already explained the 'magic picture box' to OYS.

 

[Crash Pad]

This is why airlines should never make money. Give Delta a couple profitable quarters and they lose their damn minds. Buying 717's, oil refineries, next it will be that condo American had in London. Airlines are so unfamiliar with profits it becomes Brusters millions.

 

[On Your Six]

The problem with the Trainer Facility(former Sunoco, now Conoco-Phillips) is that its a Brent plant and not a WTI plant.

Brent is about $20/bbl higher in price than WTI. Brent crude contains loads of sulfur which makes the refining process even more expensive, and that's on top of the $20/bbl difference.

This plant can be converted at considerable cost, but whomever buys it is going to have to steal it to make it worthwhile. And its a long shot that the new owner, if there is a change in ownership, can make any money with it.

*This analysis comes from a former Fortune 100 Oil company CEO, and the current CEO/Owner of the largest privately held LPG import business in the US(I'd say he has a pretty good handle on this)

Advice to DAL: Be careful what you wish for.

DAL uses Brent Crude in their calculations, not WTI. Since it is a Worldwide airline, Brent covers the bases for fuel all over the World. Also, I have a feeling the company has looked into this carefully. If they are interested, there is probably a good reason. The CEO you mentioned maybe enjoys over charging airlines, and could be threatened by other CEO's "thinking outside the box." And, ancillary revenues for the 3rd quarter last year alone totalled $841 million for the airline. So, this probably isn't a move of desperation. If it happens, there is probably a good reason for it.



Godspeed!


The OYSter

 

[SWA GUY]

OYS,

Sounds like you and DAL have it all figured out. Good luck!