Gov. Corbett hails rescue of Delco refinery

Gov. Tom Corbett

May 1, 2012 3:22:15 PM PDT
Delta Air Lines hopes to reopen its newly acquired suburban Philadelphia fuel refinery by the end of the summer.

After three months of unemployment, Steve Polit was among the laid off oil workers on hand to hear from the refinery's new owner Delta Airlines.

"What it means, is it means is we can finally get back to work, chomping at the bit to get back in there and work and support our families," Polit said.

Delta President Ed Bastian said in a news conference on Tuesday the airline wants the refinery in Trainer to be back up and running by Labor Day.

ConocoPhillips shut down operations at the Trainer facility in the fall and threatened to close it if a buyer wasn't found by the end of May.

Delta Air Lines said Monday it was buying the refinery from Phillips 66, a refining company being spun off from ConocoPhillips. It hopes the $150 million deal will cut its jet fuel bill.

Delta Airlines buys 4 billion gallons of jet fuel per year.

"We're going to put Trainer back to work," said Bastian, who smiled as he was interrupted by applause. "Some may say this is an unconventional move, but I can assure you we've been every thoughtful about this and we consider this an innovative move."

Of the 400 workers who will be going back to work some 230 of them are from the United Steelworkers Union - they are the highly-paid oil production workers. It was announced Tuesday that those workers have a tentative agreement to work for Delta at the Trainer facility.

In a news conference on Tuesday, Gov. Tom Corbett and other Pennsylvania officials hailed the deal as a way to preserve 5,000 jobs at the refinery and in related industries.

"The refinery is not merely a place of employment, it is a symbol of this region's link to the past and its readiness for the future," Gov. Corbett said.

Corbett is offering Delta a $30 million grant to buy the refinery and says it will help preserve more than 5,000 jobs at the facility and in related industries.

Here's how it will work: Delta subsidiary Monroe Energy LLC will buy and run the refinery and will get crude oil from BP PLC. The refinery has access to pipelines that can take jet fuel to New York, where Delta has hubs at LaGuardia and John F. Kennedy airports.

The gasoline, diesel fuel and other products the refinery makes will be swapped with BP and the ConocoPhillips division, Phillips 66, for jet fuel to be delivered to Delta elsewhere in the U.S. Delta aims to fill 80 percent of its U.S. fuel needs this way.

But refining, the practice of taking crude oil and turning it into fuels, is notorious for boom-and-bust cycles. ConocoPhillips and other oil giants are getting out of the business because it hasn't been consistently profitable.