Seven months ago, ConocoPhillips idled its Trainer plant, and the prospects for restarting the facility and sending its 700 workers back to their jobs seemed bleak and uncertain.
But Monday, Delta Air Lines announced it is buying the refinery to produce fuel for its airplanes – and many of those jobs may be saved.
Today, a bevy of elected officials including Gov. Tom Corbett, U.S. Sen. Patrick Toomey, R-Pa., U.S. Rep. Patrick Meehan, R-7, of Upper Darby, state Senate Majority Leader Dominic Pileggi, R-9, of Chester and members of Delaware County Council will confirm the agreement has been reached at a press conference at the site.
Delta Air Lines has formed a wholly owned subsidiary, Monroe Energy LLC, to purchase the 185,000-barrel-per-day facility in a $150 million deal with Phillips 66 that includes pipelines and transportation assets that will allow jet fuel manufactured at the site to be delivered to Delta’s hubs at LaGuardia and JFK in New York City.
Monroe expects to fulfill 80 percent of Delta’s jet fuel needs in the United States through the production at the Trainer refinery in conjunction with multi-year agreements with energy companies that exchange gasoline, diesel and other refined products made there for jet fuel in other parts of the country.
One of those companies includes Phillips 66, which will purchase gasoline and other refined products from Monroe, which will receive jet fuel from Phillips 66 in other parts of the country.
Monroe will buy the refinery with $30 million in assistance from Pennsylvania for job creation and infrastructure improvement and $150 million of its own funds.
The company also expects to invest another $100 million to convert existing infrastructure to maximize jet fuel production to produce 52,000 barrels per day.
Monroe will also enter into a three-year agreement with BP to provide the refinery’s crude oil needs.
“Acquiring the Trainer refinery is an innovative approach to managing our largest expense,” said Richard Anderson, Delta’s chief executive officer. “This modest investment, the equivalent of the list price of a new wide-body aircraft, will allow Delta to reduce its fuel expense by $300 million annually and ensure jet fuel availability in the Northeast. This strategy is aligned with the moves we have made to build a stronger airline for our shareholders, employees and customers.”
United Steelworkers Union Local 10-234 President Denis Stephano, who was among union officials negotiating with Monroe to craft a back-to-work agreement and a contract since the beginning of April, said this is a positive action.
“It’s good,” he said. “It’ll get people back to work. Monroe’s going to do what’s necessary to get people back to work, to go through the interview process, to make it as efficient as possible. They did their due diligence on the refinery and they also did it on the workforce.”
County officials said the sale would result in 380 permanent direct Delta jobs and another 100 permanent contracting positions.
Stephano said the plant will be staffed differently but will be run similarly as to when owned by ConocoPhillips.
“They’re going to get a good work force and they’re going to get a good plant,” he said. “It’s a good deal. I think it’s a unique opportunity for them and for people working there.”
Meehan called it “terrific news.”
“I think this is just a tremendous victory and certainly, I look at the way … the community and the government rallied around what is possible,” he said. “It’s just a great day to see that the efforts paid off.”
Citing his work with Delta, ConocoPhillips, Corbett and the Pennsylvania delegation, U.S. Sen. Robert Casey, D-Pa., also described the announcement as victorious.
“The expected purchase of the Trainer refinery by Delta Airlines is a major victory for our workers and the Pennsylvania economy,” said Casey. “Retaining this facility as a refinery is a big win for everyone involved. I was impressed both by Delta’s forward-thinking management style and its innovative approach to current market realities.”
Toomey called it “a great relief to the hundreds of workers and their families impacted by the recent refinery layoffs in Delaware County.
“I am pleased to welcome Delta Air Lines to Delaware County and am fully committed to helping this sale navigate the regulatory process,” said Toomey.
Local officials were pleased that the site will remain a refinery.
“I think it’s a great honor for us to welcome Delta to Delaware County,” Delaware County Council Chairman Tom McGarrigle said, referring to a county resolution supporting a refinery instead of a natural gas terminal because of its potential to save more jobs.
Monroe Energy officials said the Trainer plant will be headed by Jeffrey Warmann, who was the former refinery manager for Murphy Oil USA Inc.’s Meraux, La., refinery. There, the 25-year industry veteran led the company’s restructuring efforts, increasing output by more than 30 percent and improving the company’s profitability.
Delta officials said they expect the deal to be completed by the end of June and to have the refinery producing jet fuel during the third quarter. Changes to the refinery’s infrastructure meant to increase jet fuel production are anticipated to be finished by the end of the third quarter and that move is expected to save more than $100 million this year.
“We expect the Trainer acquisition to be accretive to Delta’s earnings, expand our margins, and to fully recover our investment in the first year of operations,” said Paul Jacobson, Delta’s chief financial officer. “We look forward to closing this transaction and moving quickly to begin capturing its benefits.”
When asked why the company would want to purchase a facility that another has deemed as under severe market pressure, Delta officials were optimistic.
“Our investments in Trainer and our capable management team are going to improve the operating performance of Trainer over time,” said Eric Torbenson, Delta Air Lines senior manager.
Staff writer Danielle Lynch contributed to this report