Delta Plans to Buy North Dakota Crude Oil for its Refinery

Delta Airlines Refinery

Delta Airlines has bought this refinery from ConocoPhillips in Pennsylvania. Now it will buy oil from North Dakota and ship it here.

Delta Airlines plans to purchase the Bakken oil field in North Dakota to use for its recent refinery purchase last May. The airline’s move is a simple and vital one: cut fuel costs.

‘The company’s strategy includes purchasing crude oil drawn from North Dakota’s Bakken oil fields at prices below what currently Delta Air Lines pays and shipping the crude oil by rail to the Trainer refinery which was bought in Pennsylvania this year. As it was stated by Edward Bastian [President of Delta], “Ownership of the refinery is enabling us to explore alternative sourcing of crude.”

According to compiled data, securing North Dakota crude oil would boost Delta Air Lines expected $300 million annual benefit from the facility. The company’s biggest expense, on fuel, jumped 15 percent in the first half of the year to $5.54 billion. Delta Air Lines officials are strongly convinced that exploring alternative sources of crude will help company save money.’

Delta Air Lines officials have said that the company planned a high-speed training unloading facility to handle up to 140,000 barrels a day of domestic oil. It seems that Delta is likely to get its hand on North Dakota crude oil.

There is a risk in Delta’s plans in owning and sourcing the crude from the midwest. Prices could run higher in the future than Texas crude, for example, and the airline would be stuck with an unprofitable oil source.

Source

Comments

  1. Chris says

    Good for Delta. In this economy everyone needs to come up with creative ideas to stay profitable. I hope they decide to keep a few DC9-50s flying a while longer as a result!

  2. Jerry says

    Delta, does not, as the story says, plan “to purchase the Bakken oil field.” It plans to buy oil from the field. If it plans, as the story seems to say, use trains to transport the oil (because there’s no pipeline that runs from the Bakken to the East Coast, that’s a pretty expensive way to move oil, when compared to pipelines or tankers.

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