Delta Air Lines has received its first shipment of North Dakota crude oil at the Pennsylvania refinery it purchased to produce its own jet fuel more cheaply.
The announcement about the shipment from North Dakota’s Bakken region was made this week by Gov. Jack Dalrymple.
Jet fuel is Delta’s largest expense, and it hopes to save $300 million annually by producing its own using more domestic crude oil instead of foreign oil. Through a subsidiary called Monroe Energy LLC, Delta reached a deal last April with Phillips 66 to buy its ConocoPhillips refinery in Trainer, Pa., and convert the plant just south of Philadelphia to produce more jet fuel.
Delta said pipelines will be able to deliver the jet fuel to its operations in New York and throughout the Northeast. Production, however, slowed at the Trainer plant in the fourth quarter after Super Storm Sandy Sandy damaged regional pipelines and terminals. Production has since recovered, Delta officials said last month.
The Atlanta-based airline hopes to generate $280 million in savings this year and refine 80 percent of its domestic jet fuel, Chief Financial Officer Paul Jacobson said on a conference call with investors in January, according to philly.com.
In a statement, Dalrymple said, “More and more, U.S. companies and East Coast refineries are turning to North Dakota’s burgeoning energy industry as a solution for cost savings and saving jobs. Delta is a great example of how Bakken crude is expanding our country’s domestic oil production and reducing our dependence on foreign oil.”
One analysts said North Dakota oil production could grow to as much as 1.2 million barrels a day by 2015.