Delta trader who championed Trainer refinery is out: report

Jon Ruggles, the ex-oil trader who headed Delta Airlines' jet-purchasing arm, was "up at the front" in Delta's "out-of-the-box" effort to take over the former Conoco-Phillips 66 refinery in trainer, Delaware County, earlier this year -- but "now he's gone" from the company, reports Platt's, the oil-industry newsletter, here, adding that a Delta spokesperson confirmed Ruggles' departure.

"What are the economics at Trainer?" asks Platt's John Kingston in the aftermath. "Delta’s goal was to capture an increasingly healthy jet crack—the difference between New York harbor jet fuel prices (and by extension other East Coast prices) and the price of crude, as measured by Brent... Hedging through swaps for that much jet can be illiquid and expensive...

"Crack spreads for jet do remain healthy. For example, looking at Friday’s Platts assessments against Dated Brent, a simple jet crack for low sulfur jet was running around $23.50/barrel; for higher-sulfur jet, around $20.80/b, and about $20.35/b for ultra low sulfur distillate (which Delta would sell, not consume, but it is a distillate, like jet.)

"But the crack on RBOB, the primary gasoline blendstock on the US East Coast, was only about $6.45/b. So after other costs, that’s probably a loser for a refiner. Even before other costs, most higher-sulfur residual fuel is in the red for any East Coast refiner...

"The other question is how much of the refinery’s crude slate has been supplanted by Bakken and Canadian barrels moved in to the East Coast by rail," to the two nearby PBF refineries, which could undercut Delta's price advantage.

"Eventually, Delta will need to disclose some general information on the refinery’s status in its quarterly earnings releases. Until then, its financial condition will be mostly speculation, fueled beyond normal by Jon Ruggles’ departure."