April 18, 2012:

A Delta Air Lines bid to buy the idled ConocoPhillips refinery in Trainer to satisfy its enormous thirst for jet fuel appears to be gaining momentum, industry observers say. According to reports, the Delta board of directors has endorsed a plan to bid on the refinery, one of three Philadelphia fuel-processing facilities that face closure because of poor profits. Two others are owned by Sunoco Inc. of Philadelphia, which is exiting the refining business this year altogether.

Prospective buyers face a May 2 deadline for a second round of bidding on the 185,000-barrel-a-day ConocoPhillips refinery, Tom Kloza, publisher of Oil Price Information Service, reported Monday. "Sources close to negotiations believe that Delta Air Lines has emerged as the clear favorite for the idle plant," he said.

Spokesmen for Delta and ConocoPhillips declined comment on the reports. The apparently robust competition among bidders for the ConocoPhillips plant and Sunoco's 335,000-barrel-a-day Philadelphia refinery are positive signals that the plants, which are big employment centers as well as reliable fuel suppliers in the region, will continue to operate. A third refinery, Sunoco's plant in Marcus Hook, has generated no interest from buyers, Sunoco says. "The action certainly implies that the Trainer refinery will be restarted in the second half of 2012, and perhaps as early as July or August," Kloza wrote.

Kloza also said that Global Partners L.P., a Massachusetts company that owns 800 gas stations in the Northeast along with a network of fuel terminals, has also "expressed interest" in the Trainer refinery. Global owns a terminal in Albany, N.Y., that can receive North Dakota crude oil that arrives by rail and is transferred to barges, which industry analysts believe may be a cheap short-term source of crude for Northeastern refiners. "People are on the edge of their seats, fingers crossed," said Denis Stephano, president of United Steelworkers Union Local 10-234, which represents more than 250 hourly workers employed by ConocoPhillips before the plant was idled last year. About 22 remain employed as caretakers.

Stephano said that an airline was also interested in buying the Trainer refinery in 1996, when a previous owner, BP, sold the plant to Tosco Corp., which later was absorbed into ConocoPhillips. But Stephano said that then, and now, there is some skepticism that an airline could operate a refinery. "Hell, some of them can't even run their own airlines," he said.

Delta's interest in buying a business that an experienced oil company wants to jettison has raised eyebrows among some analysts, who believe that the airline has other means available to protect itself from fuel-price fluctuations without investing in manufacturing. "At one level, it makes sense to better manage supply," said James Balaschak, a principal with Deloitte Consulting L.L.P. in Philadelphia. "On the other hand, it is outside their core business. There are alternative strategies, such a hedging, which can be as effective."

By Philly.com