It's a done deal

[WorldTraveler]

http://www.reuters.com/article/2012/06/22/delta-refinery-idUSL2E8HMCBF20120622?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews&rpc=43

Note that based on EIA data, DL's jet fuel output at Trainer will about equal the jet fuel capacity of all refineries in the NE as of Jan 1, 2012. (PAD district 1)
http://205.254.135.7/dnav/pet/pet_pnp_cap1_dcu_R10_a.htm

 

[signals]

I take it this must be a good thing?

If the refinery is still producing diesel and commercial fuel, is there anyway that Delta can make it a jet-fuel only refinery? Or would it cost too much, go through too much red tape, or just be easier to leave it as is?

 

[QA4Jet-A]

I take it this must be a good thing?

If the refinery is still producing diesel and commercial fuel, is there anyway that Delta can make it a jet-fuel only refinery? Or would it cost too much, go through too much red tape, or just be easier to leave it as is?

IMO, making it a Jet-A ONLY Refinery would waste a lot of valuable product that could be refined into gasoline and other product.

 

[signals]

I said something to that effect, because the other fuels would offset jet fuel prices. But many couldn't see it. I thought this project was a good idea. So am I and others right?

 

[southwind]

I take it this must be a good thing?

If the refinery is still producing diesel and commercial fuel, is there anyway that Delta can make it a jet-fuel only refinery? Or would it cost too much, go through too much red tape, or just be easier to leave it as is?

Whatever diesel or commercial fuel produce at Trainer will be traded, contracts are already signed, for Jet fuel. So, in essence, "Whatever" is produced from the facility, the end result will be 100% Jet fuel !

 

[WorldTraveler]

It has been said that the chemical limit of the refining process yields a maximum of about 1/3 jet fuel. Delta is pushing the refinery to the chemical limit.
Note that DL is continuing w/ the transaction despite the 15-20% fall in crude prices over the past month or so. If DL wanted out of the deal, they certainly could have reason to do so... but it says they are continuing w/ the transaction because it is aimed at reducing the difference in jet fuel relative to the cost of gasoline - which is pushed up because more and more refining capacity is being shut down. Given that most refineries in the US produce 12-15% jet fuel with the greatest output in gasoline, jet fuel production continues to fall at a rate that DL feels puts the availability of jet fuel at risk based on decreased refinery capacity in the US and Europe, which reflects those economies' current weakness but also the increased fuel efficiency that is occurring in the US.

There is alot of information on the EIA website I cited above that shows that there is indeed a possibility that left to market forces, jet fuel availability will fall and prices will rise relative to other petroleum products. DL's move is intended to keep the market in balance for DL's needs. It is important to note that there is no assurance that other refiners will produce the same amount of jet fuel they currently do since they could reduce production of jet fuel to force the price of their jet fuel up to offset the jet fuel Trainer will produce, although it can be used only by DL.
.
Also, DL has said that the refinery deal will free up cash which it and other airlines have to use to buy jet fuel in advance including with the use of hedges which have not been shown to deliver a long term cost reduction. By buying jet fuel as it is needed, DL could be freeing up $1B or more in cash for use for other uses including executing strategic objectives, or reduce the amount of cash it must keep on hand.