Wednesday, 23 April 2014 23:19
NEW YORK: Delta Air Lines said on Wednesday it expects its 185,000-barrel-per-day refinery in Trainer, Pennsylvania, to be profitable in the second quarter of 2014.
The refinery, run by Delta subsidiary Monroe Energy LLC, produced 50 percent distillate refined products in March, which includes diesel and jet fuel, after first-quarter work on one of the refinery's crude units, Delta's chief financial officer, Paul Jacobson, said on a conference call.
A 90,000-bpd crude unit at Trainer underwent planned maintenance in January. The modifications "will yield a higher level of jet and diesel distillates going forward and improve the profitability of Trainer," Delta said in its earnings release on Wednesday.
In addition to lower refinery throughput because of the planned work, Delta said Trainer incurred a $41 million loss for the first quarter "as a result of the same lower market fuel prices that lowered Delta's overall fuel spend."
The refinery's profitability also "was negatively impacted by an increase in Renewable Identification Numbers (RINs) expense," Delta said in its earnings release.
RINs, or ethanol blending credits, are paper credits used to meet quotas for blending biofuel into gasoline and diesel.
The company did not specify the RINs cost in the first quarter, but officials said on Wednesday they would "continue to work with the EPA to reduce this burden."
The cost of the RINS is at the heart of an ongoing battle between refiners seeking to get the Environmental Protection Agency to ease the rules and ethanol proponents hoping to keep them in place.
A group of refiners last year successfully convinced regulators that ethanol blending capacity had hit its peak.
In November, the EPA explicitly recognized the so-called blend wall, proposing to cut corn ethanol blending quotas from 14.4 billion gallons to about 13 billion gallons for 2014.
A final rule is expected to be completed by the end of June. Delta's share price was up 4.6 percent at $36.58 at 1:21 p.m. (1821 GMT) on Wednesday.Copyright Reuters, 2014